Facilitating SMEs' profitability through total quality management: the roles of risk management, digitalization, stakeholder management and system deployment

Abstract

Purpose - This study investigates the effect of total quality management (TQM) on small and medium enterprises (SMEs)’ profitability by examining whether the new TQM dimensions of risk management, digitalization, stakeholder management, and system deployment, facilitate the impact of traditional TQM dimensions on profitability.

Design/methodology/approach - A structured survey of 271 Finnish SMEs divided into industry companies and service companies.

Findings - Risk management facilitates the relation between continuous improvement and company profitability. Digitalization does not facilitate the relation between TQM dimensions and company profitability. Stakeholder management facilitates the relation between management/leadership and company profitability, customer focus and company profitability, and continuous improvement and company profitability. System deployment does not facilitate the relation between TQM dimensions and company profitability.

Originality - Most prior studies are based on the traditional TQM classification. The TQM dimensions of this study are more comprehensive than previous studies and take into account the latest trends in business development. The findings of this study differ from most previous studies and provide a source of reflection for SME management on how TQM should be implemented so that it affects the company’s profitability.